Sunday, January 2, 2011

High Demand for German Luxury Cars in the U.S. and China

Germany’s car market has definitely seen better days, as sales in the first 11 months of 2010 are down 25.2% compared to the same period last year. However, strong demand for luxury cars in the U.S. and China is keeping premium automakers like Audi, BMW and Mercedes-Benz busy during the holiday season and, most importantly, profitable.

“2010 was expected to be a tough year all round” John Lawson, a London-based analyst at Citi Investment Research, wrote in a report. “But rich China sales have leapt (and) foreign exchange has been very supportive”.

As a result, German manufacturers have shortened Christmas holidays and are keeping some of their production facilities open between Christmas and New Year’s.

State-side, the premium segments have seen an 11.1 percent increase in demand, outperforming the overall market growth. Audi has profited the most from the economical rebound, with sales up 23.6% for the year through November. Mercedes follows closely behind, with an 18.6% increase, while BMW takes third place with +11.6%, according to Autodata Corp.

The Chinese market fared even better, registering a 40% increase in the luxury car segment, also led by the Ingolstadt-based carmaker. Nine of the ten top selling premium vehicles in China are German, with Lexus securing just one spot on the list. Furthermore, the uphill trend is expected continue over the next five years.

“The luxury car segment is expected to keep double-digit growth in the next five years, with the booming number of second-time buyers who are eager to distinguish themselves and keen to prove their social status”, J.D. Power said in a December report about the Chinese market.